vol. xlvi april 2017 “stuck in the...

With apologies to StealersWheel, with “Clowns tothe left” and “Jokers to

the right,” gold — and in fact allof the investment markets — are“stuck in the middle.”

As everyone knows, the U.S.stock market finally broke its win-ning streak and took a tumble asthe thesis behind the Trump Bumpbegan to rapidly unravel.

In short, the idea that theTrump administration would insti-tute major tax reform and infra-structure spending that would pro-vide a big boost to the U.S. econo-my faded along with theRepublican failure on healthcarereform.

The resulting uncertainty put abrief bid into gold.

But, as you’re about to see,I’m worried about the character ofthis buying. In addition, the metal

has bumped up againstsome key resistancelevels that it needs tosurmount soon to keepits 2017 rally going.

Before we get intoall this, let’s recap howwe got to this cross-roads….From BumpTo Slump?

After DonaldTrump’s shocking vic-tory in November, theexpectation of contin-ued Fed demurring onrate hikes against abackground of a mori-bund U.S. economy was quicklyreplaced by a jolt of positiveadrenalin for investor sentiment.

The dollar strengthened, thestock market soared, sentimentspiked…and gold declined intoDecember.

Then the metal rallied once theexpected December Fed rate hikeactually occurred, releasing theselling pressure on the metal.

But gold continued to rise overthe next few weeks as investorsrealized that — if we did get thenewly-expected spurt of economicgrowth — then inflationary pres-sures that had been building forsome time would eventually boilover.

Subsequent inflation data sup-ported this notion and, despite a

GOLD NEWSLETTER1APRIL 2017

“Stuck InThe Middle”As the Trump Bump briefly transformed into the Trump Slump,

investors started buying gold once again.But safe haven demand isn’t the ideal driver for gold, and as expected this is proving to be a weak foundation for a rally.

By Brien Lundin

Potpourri

INSIDE:22 (Continued...)

Vol. XLVI April 2017


price correction in the first half ofMarch as a Fed rate hike becameapparent, gold rebounded (asexpected) once the rate hike actu-ally occurred. It continued toadvance as investors factored inthe reality of negative real interestrates for years to come.

This is what I characterize as“good” gold demand — buyingbased on longer-term monetaryconcerns, on the idea that fiat cur-rencies are and must be debasedrelative to gold.

But then we got a dose of whatI view as the less-ideal type ofdemand for gold — the “safehaven” variety.

It emerged as the Donaldseemed to be losing his mojo. Thehealth care reform bill lost supportamong Republicans, putting theprospects for tax reform in consid-erable doubt.

Thus, the entire rationale forthe post-election rally in stocks,the dollar and investor sentiment— the Trump Bump — was beingput in doubt.

And then came the shockingterrorist attack in London, whichled even more people to buy gold.

Out of fear. No doubt the fear

was justified. But thegold buying wasn’t.A FoundationOf Shifting

Sand

Let me put thisclearly, once again:You should never buygold based on short-term geopoliticalcrises.

There’s simply noreason to do so,except for the possi-bility of a short-term

trading profit predicated on anassumption that you’ll beat othersto the punch in both buying andselling.

Consider this: If there’s a spateof terrorist attacks near you, ofwhat use will gold be? How will itprotect you?

I’d venture to say you’d be bet-ter off buying copper-jacketed leadinstead of gold or silver.

Of course, gold is a great storeof portable wealth in the event of acomplete breakdown of civil soci-ety. But that’s not what we’re talk-ing about here.

In a short-term, headline-mak-ing crisis, anyone who buys gold isdoing so because they believe oth-ers are going to buy gold for thesame reason…only after them andat higher prices.

It’s a greater fool strategy ofinvesting. Which means it hardlyever works, because someone’salways going to buy cheaper thanyou, and sell before you can.

Here’s the real reason investorsneed to buy gold: for protectionagainst the inevitable depreciationof fiat currencies.

The debts that the U.S. andother developed economies havebuilt up are monstrously large, andstill growing. Their size demandssome significant level of currencydepreciation, and every investorneeds to insure themselves fromthis eventuality.

That means gold and silver.

105.00105.00

78.0078.00

84.02

90.50

97.48

84.02

90.50

97.48

Could the right shoulder of a head and shoulders pattern be formed? Breaking below the neckline at 99.23 would not be good.

%B

-50-25

0255075

100125150

12/3

1/13

2/28

/14

4/28

/14

6/24

/14

8/20

/14

10/1

6/14

12/1

2/14

2/11

/15

4/9/

15

6/5/

15

8/3/

15

9/29

/15

11/2

4/15

1/25

/16

3/22

/16

5/18

/16

7/15

/16

9/12

/16

11/7

/16

1/5/

17

3/6/

17

5/2/

17

Copyright © 2017 Thechartstore.com

-50-250255075100125150

U.S. Dollar Index (DX)(Daily with 50 day Moving Average (MA) and Bollenger Bands)

Yes, you can profit from themetals as these long-term trendsdevelop, especially if you leverageyour position with high-qualitymining stocks.

But gold’s primary role is tosafeguard your wealth against thedestruction of fiat currencies, adynamic that is firmly in place.

Buying the metal because ofsome geopolitical flash-point or atemporary shift in trader sentimentis like building a house on a foun-dation of shifting sand.

That said, this type of safehaven demand is precisely whatwas driving gold in the wake of thehealth-care reform failure and theLondon terror attack. And becausethe buying was based upon theseheadlines, I expressed my concernin our Alerts and GoldenOpportunities that the surge indemand wouldn’t last.

And so it’s proven to be, asgold has traded sideways to slight-ly down over the past couple ofsessions.

The result is that…as theclowns, jokers and assorted buf-foons in Washington jockey forposition…gold and other assetsremain stuck in the middle until atrend emerges.

From all indications, the waitwill not be long.

Technical AndFundamentalCrosswinds

From a technical standpoint,gold is at an important crossroads.(Yes, it seems like it always isthese days.)

While the price has shownstrong support around $1,200, ithas met with significant resistancein the $1,250-$1,255 range, orright about where it is right now.

In addition, the 200-day mov-ing average currently lies around$1,263, and gold failed in its previ-ous assault on that level in lateFebruary. To extend this year’srally at least into early summer, themetal needs to break through over-head resistance at this 200-daymoving average.

On the positive side, we’veseen silver outperform gold veryrecently, which is always a sign ofa healthy market.

On the negative side, as youcan see from our chart of the GoldBugs Index, the mining stockshave underperformed the metalssignificantly for weeks now. This isa symptom of an unhealthy goldmarket.

So on which indicator shouldwe place the most credence?

It’s hard to say, because therehave been some games beingplayed in the paper silver marketthat are unique to it as opposed togold, at least in terms of degree.The relative strength we’re seeingcould be partially due to a release

of short-selling pressure in silver.That said, if gold takes off in

the near term for some reason, Iwould expect the mining stocks tosurge ahead as the greed factorkicks back in. In other words, thisnegative indicator could disappearin a flash.

One thing that had helped golda few weeks ago, and has beenhurting it over the past few days,has been the Dollar Index. As youcan see from our accompanyingchart of the Dollar Index (courtesyof TheChartStore.com), the post-election Trump Bump carried thegreenback to a new multi-yearhigh.

But the index backed off as theFed came through with its Marchrate hike, and then again asTrump’s health care reform col-lapsed. As Ron Griess notes on ourchart, a potential head-and-shoul-ders pattern has been formed, and abreak below the neckline of thatformation at 99.23 would havebearish implications for the index.


1,5001,500

1,0001,000

1,105

1,220

1,350

1,105

1,220

1,350

Gold is holding above the 50 day moving average.

%B

-75-50-25

0255075

100125150

12/3

0/13

2/26

/14

4/25

/14

6/24

/14

8/19

/14

10/1

5/14

12/1

0/14

2/11

/15

4/10

/15

6/9/

15

8/4/

15

9/30

/15

11/2

5/15

1/25

/16

3/21

/16

5/19

/16

7/15

/16

9/12

/16

11/7

/16

1/5/

17

3/2/

17

5/2/

17


-75-50-250255075100125150

Gold (London PM Fix)(Daily with 50 day Moving Average (MA) and Bollenger Bands)

(Continued...)

http://www.thechartstore.com

The index actually closedbelow that level on Monday of thisweek, but has since rallied backabove the key 100 level. I’m not atechnician, but I’d call the actioninconclusive at this point.

It’s definitely something thatbears watching in the days ahead,however, because the BollingerBands are compressing, whichindicates a breakout soon in onedirection or the other.

Similarly, we see from ourchart of gold with its 50-dayMoving Average and associatedBollinger Bands that the bands arealso “squeezing.” So while we’restuck in the middle right now, Iexpect some volatility soon. Verysoon.

That argument is further sup-ported by our chart of gold with its14-week stochastic.

As you’ll remember, the goldmarket has undergone an importantcharacter change since recoveringfrom the long bear market in early2016. That change is seen in the

elongated, “rounded” tops in the14-week stochastic, as opposed tothe sharp, short-lived peaks thatcharacterized the bear market of2011-2015.

Since early 2016, we’ve seenthe type of long-lasting tops in thestochastic that we saw in the 2005-2011 timeframe, when gold wasable to sustain its upward momen-tum.

So as you can see in thismonth’s chart, we’ve hit a criticalpoint once again, with the 14-weekstochastic reaching 80. Whethergold can maintain its momentumand stay above this level for sometime will determine if gold is,indeed, in the same bullish environ-ment that began in 2016.

My view? I think the back-ground for gold remains positive,and the upcoming breakout will beto the upside.

The Trump Bump thesis of aneconomic rebound was, eventually,interpreted in a bullish fashion forgold. Then the unraveling of this

thesis, for as long as it lasted, wasinterpreted bullishly as well for themetal.

When the default is for newinformation to be interpreted aspositive, an asset is in a bullishmode. That’s what we’ve seen forgold.

To some degree we can chalkthis up to Donald Trump. He addsso much uncertainty to the globaleconomic and geopolitical outlookthat, unlike the typically short-livednature of safe haven gold buying,there remains an undercurrent ofhedging demand in the back-ground.

But even on a monetary basisthere’s a powerful argument forgold. The Fed maintains that atleast another two rate hikes arecoming this year, but everyoneknows that they’ll never have theguts to get ahead of inflation.

As I showed in last month’sissue, while U.S. Treasury yieldshave risen over the last year andover the last month, real yieldsadjusted for inflation are actuallyfalling.

In fact, the real U.S. Treasuryyield is now negative out to the 10-Year note! The 20-Year bond isright at zero on a real basis, andslipping.

This is the fundamental, mone-tary driver for gold going forward.And I think it will trump every-thing else in lifting gold over thelong term.

Again, the mining stocks —even our little juniors — have beentrading weakly as a group sincemid-February. Given my longer-term outlook for the metals, I thinkthis can be considered a buyingopportunity in general.

And as you’re about to see inour monthly review of our favorite


2,000 2,000

250250

375

575

875

1,325

375

575

875

1,325

We interpret the indicator as being on a buy signal.

14 week Stochastic (%K, %D)

0102030405060708090

100

12/3

1/99

6/30

/00

12/2

9/00

6/29

/01

12/2

8/01

6/28

/02

12/2

7/02

6/27

/03

12/2

6/03

6/25

/04

12/2

4/04

6/24

/05

12/2

3/05

6/23

/06

12/2

2/06

6/22

/07

12/2

1/07

6/20

/08

12/1

9/08

6/19

/09

12/1

8/09

6/18

/10

12/1

7/10

6/17

/11

12/1

6/11

6/15

/12

12/1

4/12

6/14

/13

12/1

3/13

6/13

/14

12/1

2/14

6/12

/15

12/1

1/15

6/10

/16

12/9

/16

6/9/

17


0102030405060708090100

Gold in US$ - London PM Fix(Weekly with 10 week MA and 40 week MA)


stocks, we’re seeing a flurry ofnews from a number of compa-nies…resulting in some very spe-cific and interesting opportunities.

So let’s get started….Atlantic GoldAGB.V; SPVEF.OB

877-689-5599atlanticgoldcorporation.com Work is progressing steadily

on mine construction at AtlanticGold’s Moose River Consolidated(“MRC”) project in Nova Scotia.

The project is about 40%complete, with the ball mill deliv-ered, tailings dam constructionunderway and environmentalwork being finalized. The compa-ny plans to have MRC, whichencompasses the Touquoy andBeaver Dam projects, in produc-tion by Q3.

It’s a very achievable mile-stone, and one that makes MRCthe only open-pit mine in Canadacurrently fully-permitted, financedand in construction. A 2015 feasi-bility study on MRC gave the pro-ject an after-tax NPV, discountedat 5%, of C$168 million and apost-tax IRR of 30.0%.

The company moved theMRC into production by applyingan open-pit model to deposits thathad previously been envisioned asunderground operations.Disseminated gold mineralizationin the near-surface shale thatexists in the area made this open-pit model possible. The MRC hasproven and probable reserves of760,000 ounces at 1.44 g/t gold.

In addition, Atlantic is eitherdrilling or has plans to drill itsFifteen Mile Stream and CochraneHill properties to generate satellitedeposits with which to feed theMRC mill additional ore.Currently, Cochrane Hill has a

252,000-ounce indicated resourceat 1.8 g/t gold, and Fifteen MileStream has an inferred resource of584,000 ounces grading 1.6 g/tgold.

At Fifteen Mile Stream, thecompany has completed 10,220meters of a planned 25,000-meterresource definition programdesigned to bring as much of theproperty’s inferred resource aspossible into the measured andindicated categories.

Highlights from recent assaysfrom this work include Hole 59(20 meters of 3.35 g/t gold from68 meters’ depth), Hole 67 (17meters of 2.26 g/t gold from 42meters’ depth) andHole 48 (45 metersof 1.12 g/t gold from64 meters’ depth).

Those are qualityassays, and theystrongly suggest thatAtlantic Gold will besuccessful in its planto add Fifteen MileStream’s ore to themill feed at MRC.

With moreassays due from thisdrilling program andconstruction pro-gressing on pacewith MRC’s targetedQ3 opening, thecompany is perfectly positionedto take advantage of a lift in goldprices.

The company’s share pricehas spiked in sympathy with goldprices in the past few days. Myadvice: Don’t chase the stock, butcontinue accumulating it on anyweakness in the days ahead.Atlantic Gold Corp.Recent Share Price: ................C$1.17Shares Outstanding: ......173.3 millionMarket Cap:..............C$202.8 million

Shares OutstandingFully Diluted: ................234.5 millionMarket CapFully Diluted:............C$274.4 million

Auryn ResourcesAUG.TO; GGTCF.OB

800-863-8655aurynresources.com

For Auryn Resources, the bignews of late was that explorationon the Sombrero Project, part ofthe company’s Peruvian propertyportfolio, has yielded a remark-able 53-meter-long trend averag-ing 1.75 g/t gold. The trench wasat the margin of a very large, 2.3-kilometer by 500-meter gold-in-soils anomaly.

In addition, the “known foot-print” of gold-copper mineraliza-tion was extended to 4.5 kilome-ters by 4.2 kilometers. And all ofthis was accomplished by thecompany’s initial, two-weekreconnaissance sampling programin December.

So it’s obvious that there’ll bemuch more news to come here.

I’ll admit that at first look Ithought Sombrero was the most

(Continued...)

GOLD NEWSLETTER6

exciting exploration project inAuryn’s portfolio, in Peru or with-out. But these results are surpris-ingly good, even to me.

Plus, it’s worth rememberingthat Sombrero is but one of sevenmajor projects the company con-trols in Canada and Peru.

I originally added Auryn to ourportfolio on the strength of its man-agement team, which brought usprevious winners KeeganResources and Cayden Resources.That recommendation was alsobased on the resource defined at,and the potential for expansion on,its Committee Bay project inNunavut.

Committee Bay’s Three Bluffsgold deposit hosts 501,000 indicat-ed ounces of gold grading 8.42 g/tand 772,000 inferred ounces grad-ing 7.16 g/t. Located within a largeland position along a 300-kilometerhigh-grade gold trend, the project’spotential is truly district-scale.

In the intervening months sincemy initial recommendation ofAuryn, management has added theGibsons MacQuoid project inNunavut, the Homestake Ridgeproject in British Columbia and

four copper-gold pro-jects (includingSombrero) in Peru.

Auryn’s shareprice has been lan-guishing since thecompany completed aC$41 million invest-ment by Goldcorp inlate January, andindeed it seems thatGoldcorp might’vetopticked the shareprice in the near term.

But the share pricehas rebounded fromthe lows of earlier inMarch. Given the

scope of the company’s prospectsand its financial ability to explorethem properly, current levels are arare bargain for one of this group’sflagship ventures.Auryn Resources Inc.Recent Share Price: .................C$3.07Shares Outstanding: ........76.6 millionMarket Cap:..............C$235.2 millionShares OutstandingFully Diluted:...................83.6 millionMarket CapFully Diluted:............C$256.7 million

Avino Silver & Gold Mines

ASM-NYSE-A; ASM.V604-682-3701avino.com

Avino Silver & Gold Minesdelivered solid operating and finan-cial results to the market in earlyMarch.

For the year, the company post-ed revenues of C$39.9 million,operating income of C$14.5 mil-lion and net income of C$2.0 mil-lion. Operating cash flows beforeadjustments to working capitalwere C$7.6 million for the year.

The company’s San Gonzaloand Avino mines, both part of itsAvino Mine complex in Durango

State, Mexico, produced 2,672,334silver-equivalent ounces for theyear. That reflected 1,612,060 mil-lion ounces of silver, 7,119 ouncesof gold and 4,206,585 pounds ofcopper.

Cash and all-in sustaining costswere fairly well contained. Cashcosts for the year averagedUS$8.48 per silver equivalentounce, and AISC were US$10.34per payable silver ounce. This latternumber represented a 13% increaseover the US$9.49 per ounce inAISC it averaged in 2015.

The company finished the yearwith C$15.8 million in cash andshort-term investments, includingC$13.4 million of cash on hand. Itinvested C$10.7 million in capitalexpenditures during the year.

Turning to Avino’s Q4 2016performance, the numbers wereequally solid.

For its most recent quarter, theAvino complex generated C$12.0million in revenues, C$3.5 millionin mine operating income andC$1.2 million in net income. Theoperating income figure reflected at141% improvement over amountgenerated in Q4 2015.

For the quarter, the companyproduced 707,775 silver equivalentounces (419,355 ounces of silver,2,581 ounces of gold and 755,645pounds of copper). Cash costs aver-aged US$8.6 per silver payableounce, and AISC averagedUS$10.01.

As you can see from thesenumbers, Avino is generating sub-stantial profits with silver prices atcurrent levels. Take this perfor-mance as an indication of the prof-its to come if silver continues on anupward track during the balance of2017.

Simply put, the primary silver

APRIL 2017

GOLD NEWSLETTER7

producers on our list, of whichAvino is a key recommendation,stand to do very well in the silverbull market I see unfolding in thecoming months. It remains a buyat current levels.Avino Silver & Gold Mines Ltd.Recent Share Price:...............US$1.74Shares Outstanding: ........52.4 millionMarket Cap: .............US$91.2 millionShares OutstandingFully Diluted: ..................59.0 millionMarket CapFully Diluted:.........US$102.7 million CanAlaska Uranium

CVV.V; CVVUF.OB604-688-3211canalaska.com

I added CanAlaska Uranium toour list last year based on itsexpansive portfolio of uranium,diamond and base-metal projectswithin and near to the AthabascaBasin.

At 500,000 hectares, the com-pany controls one of the largestland positions in the region. And itapplies the prospect generatormodel to maximize its explorationprograms while minimizing itscash burn rate.

For the uninitiat-ed, prospect genera-tors are junior miningcompanies that usetheir early-stageexploration expertiseto identify andacquire a large prop-erty portfolio. Theythen shop those pro-jects to joint venturepartners willing to dothe heavy lifting ofadvanced-stageexploration, includingdrilling, in exchangefor an interest in theproject.

When executed well, theprospect generator model offersinvestors an inexpensive way toinvest in a diversified portfolio ofassets. The sizable number of pro-jects gives investors more lotterytickets, if you will, to play in themining exploration game.Meanwhile, investment from jointventure partners ensures thatinvestor money is frugally spent.

CanAlaska demonstrated itsabilities executing this modelrecently by providing the marketwith an update on itsmyriad projects innorthernSaskatchewan,Alberta andManitoba.

At WaterburyWest, the companyretains a 2% royaltyinterest in any urani-um project, aftervending the projectlast year to Cameco.The uranium majoris currently drillingthe project as part ofa joint venture.

At Moon South,the company is in

the midst of prepping for a resis-tivity study that should begin inApril. Work will focus on the CR-3 trend, which lies two kilometerswest of the K-trend. The K-trendis home to the Gryphon deposit onDenison Mines’ adjacent WheelerRiver property. A follow-on drillprogram at Moon South is plannedfor the summer.

The company is awaitingdetails from JV partner Cameco onthe major’s drilling plans for theirshared West McArthur uraniumproject. Management anticipates afocus on the Grid 5 and Grid 1 tar-gets.

CanAlaska is awaiting infor-mation also on a drilling programbeing designed by JV partnerNorthern Uranium on their sharedNW Manitoba project. A numberof proposed targets have beenidentified.

The company is in the processof evaluating the data left behindby former JV partner De Beers onits West Athabasca diamond pro-ject. It is actively looking for newpartners to explore this projectmore extensively. It is also con-

APRIL 2017

(Continued...)

AAvviinnoo SSiillvveerr && GGoolldd MMiinneess

$$11..3300

$$11..4400

$$11..5500

$$11..6600

$$11..7700

$$11..8800

$$11..9900

$$22..0000

$$22..1100D

ec 2

8,

2016

Jan 3

, 2017

Jan 9

, 2017

Jan 1

5,

2017

Jan 2

1,

2017

Jan 2

7,

2017

Feb 2

, 2017

Feb 8

, 2017

Feb 1

4,

2017

Feb 2

0,

2017

Feb 2

6,

2017

Mar

4,

2017

Mar

10,

2017

Mar

16,

2017

Mar

22,

2017

Mar

28,

2017

©© 22001177 GGoolldd NNeewwsslleetttteerr ((CChhaarrtt pprroovviiddeedd bbyy TThheecchhaarrttssttoorree..ccoomm))


ducting an airborne magnetics sur-vey on its Alberta diamond pro-ject.

At the North Ruttan copper-zinc project, the company isplanning a drill program to testthe 1.2-kilometer-long NorthRuttan target north of the past-producing Ruttan mine. A smalldrill program is underway atNisku, a large target locatedseven kilometers east of NorthRuttan.

With C$1.6 million in thebank, thanks primarily to arecently completed private place-ment, CanAlaska has enoughmoney to conduct at least twoyears of exploration. That assess-ment is based on the company’slow cash burn rate and its abilityto attract JV partners.

As you can see from thismonth’s recap, the companyshouldn’t lack for news flow in2017. It remains a solid bet onminerals exploration in northernCanada and a buy.CanAlaska Uranium Ltd.Recent Share Price: .................C$0.43Shares Outstanding: ........27.3 millionMarket Cap: ................C$11.7 million

Shares OutstandingFully Diluted: ...............31.8 millionMarket CapFully Diluted: ........C$13.7 million

Columbus GoldCGT.TO; CBGDF.OB

888-818-1364columbusgoldcorp.com

Columbus Gold’s share pricehas rebounded, after taking a hitfollowing the release, on March20, of a bankable feasibility study

for the Montagned’Or gold project inFrench Guiana.

The study beatinvestor expectationsin a few areas, mostnotably an initialcapital expense num-ber of $361 millionand an all-in sustain-ing cost (includingclosure/reclamation)of $779/ounce ofgold.

However, theafter-tax internal rateof return of 18.7%was a bit skinny,yielding an after-tax

net present value (5% discount) of$370 million.

In addition, the study projectedProven and Probable Reserves of2.745 million ounces of gold at anaverage grade of 1.58 g/t, and a12-year life-of-mine production of2.572 million ounces. This wasmuch lower than the total mea-sured and indicated resource (ofwhich the reserves are a subset) of3.85 million ounces.

The good news, as stressed bymanagement in a barrage of post-release investor calls, is that thereis much room for improvement.

One consideration is that, dueto a complicated dilution schedulein Columbus’ joint-venture agree-

ment with partner Nordgold, itmay have been to Nordgold’sadvantage to have the feasibilitystudy yield a Proven and ProbableReserve under 3.0 million ounces.

So, it was likely unduly con-servative.

However, with this feasibilitystudy in hand and the project mov-ing forward, both Columbus andNordgold have their interestsaligned and can jointly movetoward optimization of the project.

The most direct and obviousway to do this would be to convertsome of the in-pit resources intomineable reserves. In the feasibili-ty study, consultant SRK identifiedadditional in-pit inferred resourcesof 960,000 ounces of gold at anaverage grade of 1.484 g/t.Columbus and Nordgold feel thata 4,300-meter drilling program ata cost of US$1.5 million couldconvert a significant portion ofthose resources — perhaps morethan 200,000 ounces — intoreserves.

Also, Columbus is already inthe process of conducting a 36-hole, 5,520-meter explorationdrilling program on its own dime.Targeting three identified targetsalong strike and distal to the mainore body, as well as the down-dipextent of the main mineralizedzones, the goal of this program isto prove there’s considerableupside potential to the project.

As I said, Columbus is fundingthis program, with the originalidea that it would boost the per-ceived value of an outside bidderfor the company and/or its interest,and therefore set the bar higher forany offer from Nordgold, theseemed natural buyer.

In fact, the original deal withNordgold was struck when thegold market was in decline, with

GOLD NEWSLETTER9

the assumption being thatNordgold would move after com-pletion of the feasibility study toacquire Columbus’ interest.

Now, however, the gold mar-ket has recovered and major com-panies are on the move to rebuildtheir project pipelines. For its part,Nordgold was always a weirdpublic company that to a largeextent existed merely to deliverdividend payments to its Russianowner. To make this process evensimpler, the company recentlywent private.

In short, in the current envi-ronment Nordgold may actuallywelcome a take-out offer from amajor for the whole project. Thus,again, both partners now havetheir interests aligned in buildingthe established and perceivedvalue of the project.

The bottom line is that thisproject has now been significantlyderisked, with substantial upsideobvious. More upside potential isin the process of being identifiedto the market. With some signsthat M&A activity is reigniting inthe gold sector, the timingcouldn’t be better.

Given industry metrics, it’seasy to see a take-over offer froma major miner resulting in as muchas a doubling of Columbus’ shareprice from current levels. And thispotential is there regardless ofwhether gold continues to rally.

On the assumption that there’ssome movement of this sort overthe next few months, Columbusremains a buy.Columbus Gold Corp.Recent Share Price: ................C$0.94Shares Outstanding: ......152.8 millionMarket Cap:..............C$143.6 millionShares OutstandingFully Diluted:.................165.5 million

Market CapFully Diluted:............C$155.6 million

Endeavour SilverEXK.NYSE; EDR.TO

877-685-9775edrsilver.com

After a difficult year in 2015,Endeavour Silver posted its full-year financial and operational num-bers for 2016.

The numbers reflected thecompany’s strategic decision, at theoutset of 2016, to curtail produc-tion and focus on profitability. Thatdecision included a choice to cutback on capital expenditures duringthe year.

Then the mini-bull market insilver and gold that occurred in theearly part of last year hit, and thecompany shifted that strategy toone of increased exploration anddevelopment.

Overall, revenue decreased15% to $156.8 million in 2016compared to 2015. That led tomine operating cash flow of $52.9million, EBITDA of $27.8 millionand adjusted income of $3.9 mil-lion. This latter number was a sub-stantial improvement over the$11.2 million adjust-ed loss the companysustained in 2015.

In line with thereturn to profitability,costs dropped signifi-cantly in 2016. Cashcosts fell 19% to$6.78 per silverpayable ounces. All-in sustaining costscame in on the low-end of managementguidance at $12.34per ounce, a decreaseof 20%.

Inclusive of apublic financing thatraised $53.3 million

in net proceeds, Endeavour fin-ished the year with $72.3 millionof cash and cash equivalents in thebank. Bullion inventory stood at311,625 silver ounces and 665ounces of gold.

On the production side, thecompany’s silver equivalent pro-duction met guidance of 9.7 mil-lion ounces. That was based on5,435,407 in silver production (a24% year-on-year decrease) and57,375 in gold production (a 4%year-on-year decrease).

Endeavour moves into the sec-ond quarter of 2017 flush with cashand with three development stageprojects to bolster the company’sgrowth profile. It added two ofthose projects — El Compas inZacatecas State and Parral in ParralState — last year. The other,Terronera, has been in the stablefor a while.

With a prefeasibility studycoming this year on Terronera anda preliminary economic assessmenton El Compas due out as well,Endeavour should keep the newswires humming in 2017.

APRIL 2017

(Continued...)

EEnnddeeaavvoouurr SSiillvveerr

$$22..7755

$$33..0000

$$33..2255

$$33..5500

$$33..7755

$$44..0000

$$44..2255

$$44..5500

$$44..7755

$$55..0000

Dec

28,

2016

Jan 3

, 2017

Jan 9

, 2017

Jan 1

5,

2017

Jan 2

1,

2017

Jan 2

7,

2017

Feb 2

, 2017

Feb 8

, 2017

Feb 1

4,

2017

Feb 2

0,

2017

Feb 2

6,

2017

Mar

4,

2017

Mar

10,

2017

Mar

16,

2017

Mar

22,

2017

Mar

28,

2017



In spite of the improvement inprofitability over 2015, the marketwas less than thrilled with the com-pany’s decline in revenues and pro-duction during the year.Endeavour’s stock sold off 24%upon the release of its 2016 num-bers, and lost about another 10%over the next few trading sessions.

While the share price hasbounced back a bit, the decline stillseems more than a bit overdone.With the outlook improving for theprecious metals, producers likeEndeavour should do well as pricestick up. Thus, the current sell-offlooks to my eyes like a buyingopportunity.Endeavour Silver Corp.Recent Share Price: ..............US$3.16Shares Outstanding: .....127.1 millionMarket Cap: ...........US$401.6 millionShares OutstandingFully Diluted:.................131.5 millionMarket CapFully Diluted:.........US$415.5 million

Energy FuelsUUUU.NYSE-A; EFR.TO

888-864-2125energyfuels.com

Energy Fuels also posted its

2016 numbers recent-ly (’tis the season),and they were whatone would expect,given the cratering inuranium prices thattook place last year.

The companygenerated $54.55 mil-lion in revenue for thefull-year. That result-ed in a gross profit of$13.74 million and anet loss attributable tothe company of$39.41 million.

That’s steep, butas I said, not unex-

pected, given the current state ofthe uranium market. Fortunately,Energy Fuels has always been along-term play for us. The compa-ny’s strategy of amassing produc-ing and advanced-stage uraniumassets puts it in position to quicklycapitalize when the uranium mar-ket regains its footing.

With uranium mines taking anotoriously long time to get per-mits and approvals in place, havinga portfolio of permitted, produc-tion-stage assets puts Energy Fuelsin the proverbial catbird’s seat.While less advanced uranium com-panies struggle to advance theirprojects, Energy Fuels can focuson monetizing increases in urani-um prices.

The company recovered1,015,000 pounds of U3O8 in 2016and sold 1,150,000 pounds ofU3O8. Those sales totals included850,000 pounds sold at a long-termcontract price of $56.64 per poundand 300,000 pounds at a spot priceof $21.10.

As you can tell from this pricedifferential, the market has a waysto go to fully recover. In the inter-im, Energy Fuels plans to reduce

production in 2017, while main-taining its focus on prepping itsCanyon Mine for eventual produc-tion.

The company’s share price hasheld onto the gains it made in theaftermath of the Trump election,but it continues to trade at attrac-tive levels for long-term accumula-tion. It remains a long-term buy.Energy Fuels Inc.Recent Share Price:...............US$2.17Shares Outstanding: ........66.2 millionMarket Cap: ...........US$143.7 millionShares OutstandingFully Diluted:...................83.7 millionMarket CapFully Diluted:.........US$181.6 million

Leading Edge Materials

LEM.V; LEMIF.OB604-685-9316

leadingedgematerials.com A piece of outside news added

considerable intrigue to theLeading Edge Materials story earli-er this month.

The news came courtesy ofPeter Carlsson, Tesla’s former VPof Supply Chain. Mr. Carlssonintends to build his own lithiumbattery “gigafactory” in Sweden.

As a reminder, lithium batteriesare the central component of all-electric vehicles and a key demanddriver for lithium going forward.That Carlsson intends to build hisfactory in Sweden and to make ashow of sustainable productionmethods make this move extreme-ly important to investors inLeading Edge Materials.

Formed by last year’s amalga-mation of sister companies TasmanMetals and Flinders Resources,Leading Edge Materials has pro-ceeded to bulk out its graphite andrare earth element holdings in

EEnneerrggyy FFuueellss

$$11..5500

$$11..6600

$$11..7700

$$11..8800

$$11..9900

$$22..0000

$$22..1100

$$22..2200

$$22..3300

$$22..4400

$$22..5500

$$22..6600

$$22..7700D

ec 2

8,

2016

Jan 3

, 2017

Jan 9

, 2017

Jan 1

5,

2017

Jan 2

1,

2017

Jan 2

7,

2017

Feb 2

, 2017

Feb 8

, 2017

Feb 1

4,

2017

Feb 2

0,

2017

Feb 2

6,

2017

Mar

4,

2017

Mar

10,

2017

Mar

16,

2017

Mar

22,

2017

Mar

28,

2017


GOLD NEWSLETTER11

Scandinavia with lithium andcobalt projects.

Obviously, in terms of thisstory, it is the company’s Bergbylithium project in Sweden that is ofthe most direct relevance.

With Carlsson intent on keep-ing his gigafactory’s supply chaintight, having a potential source oflithium in close proximity shouldput Leading Edge near the head ofthe negotiating table whenCarlsson’s company seeks outlithium suppliers.

The establishment of a Euro-centric approach to specialty met-als production was a definingstrategic theme for both Tasmanand Flinders, and it continues to bea key theme under the LeadingEdge Materials moniker.

The 1,903-hectare Bergby pro-ject lies 25 kilometers north of theSwedish town of Gavle and isclose to all needed infrastructure,including a deep-water port.Earlier this month, the companykicked off a maiden drilling pro-gram on the project consisting of25 diamond drill holes.

Surface exploration at Bergbyhas yielded 15 samples from threeoutcrop areas grading between0.01% and 4.65% lithium oxide(Li2O) and averaging 1.71%Li2O. The combined area of thethree site samples covers 350meters by 750 meters.

Management is hopeful thatdrilling will uncover significantquantities of mineable grade lithi-um. Time will tell, but based onthe Carlsson news, it’s clear thatthe company will have an interest-ed buyer if this program leads tothe discovery of a new lithiumdeposit.

With Europe a key market forelectric vehicles, any whiff of suc-

cess from this program could lighta fire under Leading Edge’s shareprice. Add in the additionalinvestor interest in Scandinavianlithium sources that the gigafacto-ry story provides, and you have themakings of a smart play on thenext wave in clean energy.

Leading Edge Materialsremains a buy at current levels.Leading Edge Materials Corp.Recent Share Price: .................C$0.72Shares Outstanding: ........84.2 millionMarket Cap: ................C$60.6 millionShares OutstandingFully Diluted:...................96.5 millionMarket CapFully Diluted:..............C$69.5 million Maritime Resources

MAE.V; MRTMF.OB604-336-7322

maritimeresourcescorp.com Maritime Resources released a

prefeasibility study, inclusive ofpreliminary economics, earlier thismonth on Hammerdown, the com-pany’s flagship gold project inNewfoundland and Labrador.

The study was based on theidentified measured and indicatedresources for Hammerdown. TheNI 43-101 compliantresource contains315,600 ounces ofmeasured and indicatedgold (925,670 tonnesof 10.6 g/t). Notincluded in the eco-nomics were an addi-tional 376,800 ouncesof inferred gold.

The study used agold price of US$1,250an ounce, an exchangerate of 1 US$: 1.25 C$and a projected dis-count rate of 8%. Inaddition, the studyassumed mill recover-ies of 97% based on

historic production by the nearbyNugget Pond gold mill.

Based on these assumptions,Hammerdown has a pre-tax NPVof C$71.2 million and an IRR of46.8%. Post-tax, those numbersdrop to C$44.2 million and 34.8%,respectively. Net after-tax cashflow from the project, undiscount-ed, is estimated at C$69 million.Capital and development costsover a projected five-year minelife are projected to be C$67.8 mil-lion.

Hammerdown would producea total of 174,000 ounces at a rateof 35,000 ounces per year.Management plans a two-prongedeffort to increase those totals. First,it will use infill drilling to upgradethe inferred resources into themeasured and indicated categories.Second, it will test the vein-systemthat hosts the known mineraliza-tion at Hammerdown along trendto test the blue sky potential.

The market shrugged its col-lective shoulders over the study, asthe current numbers involved areadmittedly modest. But betweenthe long-term exploration potential

APRIL 2017

(Continued...)

MMaarriittiimmee RReessoouurrcceess

$$00..1111

$$00..1122

$$00..1133

$$00..1144

$$00..1155

$$00..1166

$$00..1177

$$00..1188

$$00..1199

$$00..2200

Dec

28,

2016

Jan 3

, 2017

Jan 9

, 2017

Jan 1

5,

2017

Jan 2

1,

2017

Jan 2

7,

2017

Feb 2

, 2017

Feb 8

, 2017

Feb 1

4,

2017

Feb 2

0,

2017

Feb 2

6,

2017

Mar

4,

2017

Mar

10,

2017

Mar

16,

2017

Mar

22,

2017

Mar

28,

2017



still inherent at Hammerdown andthe company’s recent pickup of anoption on the nearby WhiskerValley gold project, Maritime doesappear to have a lot of upside fromcurrent levels.

At 52 square kilometers,Whisker Valley lies just 10 kilo-meters from Hammerdown.Sampling on Whisker Valley con-ducted last year included 11 veingrab samples. Nine of those sam-ples yielded high-grade gold (any-where from 13.3 g/t to 30.5 g/t).

Given its close proximity toHammerdown, the addition of thisproject gives Maritime a wholenew potential source of vein-host-ed gold with which to feed theHammerdown mill.

As a development and produc-tion story, there’s a lot to like withMaritime. I like the projects andthe quality of the work being doneso far. That’s why I personallybought the stock and still hold allof my position.

My only issue is with the paceof progress — the prefeasibilitystudy took far longer than anyoneexpected, and this doesn’t bodewell for the timing of the remain-

ing work before pro-duction.

With so manyopportunities emerg-ing these days, andpotentially fasterhorses to ride, Ithink it’s best thatwe move on andredeploy what we’veallocated toMaritime. Again, Ithink the companywill reward share-holders over the nexttwo years, but fornow we’ll yield toour impatience andcease coverage.

Maritime Resources Corp.Recent Share Price: .................C$0.12Shares Outstanding: ........58.9 millionMarket Cap: ..................C$7.1 millionShares OutstandingFully Diluted:...................77.6 millionMarket CapFully Diluted:................C$9.3 million

Osprey GoldDevelopment

OS.V236-521-0944ospreygold.com

With its recent name changefrom Gonzaga Resources and itsofficial acquisition of its flagshipGoldenville gold project in NovaScotia, Osprey Gold has been busyover the past several weeks.

It officially closed on itsoption to acquire a 100% interestin Goldenville in early March. Thedeal was consummated by issuing5,840,000 common shares ofOsprey in exchange for all theissued and outstanding shares ofthe prior owner, Crosby Gold.

In conjunction with the acqui-sition, Osprey also closed on aC$1.8 million financing thatissued 7.2 million units priced at

C$0.25 per unit. Each unit consist-ed of one common share and onehalf-warrant, redeemable on awhole-warrant basis for C$0.40for up to 18 months.

Shortly after this announce-ment, the company provided themarket with an updated resourceestimate on Goldenville. The“capped” inferred resource on theproject comes to 288,000 ounces(2.8 million tonnes of 3.20 g/tgold), while the “uncapped”inferred resource comes to447,000 ounces (2.8 milliontonnes at 4.96 g/t gold).

This new, capped resource rep-resents a 60% increase on theinferred resource outlined in 2005,which was categorized as bothindicated and inferred. The new2017 total included results fromeight holes drilled by AcadianGold in 2006, but never incorpo-rated into a resource estimate.

The company has wasted notime in attempting to build on thisrevised resource estimate. Earlierthis week, it acquired unassayeddrill core left behind by a 2014exploration program onGoldenville.

Given that these 24 holes weredrilled to shallow depths and inrelatively close proximity to eachother, the odds are decent that theycome from a potential starter zoneconceptualized on the project. Thisgives us hope for good news soonfrom the assay lab.

I added this company to ourlist recently based on my faith inits management team and theirplans for breathing new life intoGoldenville, which I consider tobe an underappreciated gold asset.Osprey Gold continues to be abuy, one that I encourage you tomake in advance of the assaysfrom this new drill core.

SSaannttaaccrruuzz SSiillvveerr MMiinniinngg

$$00..2244

$$00..2255

$$00..2266

$$00..2277

$$00..2288

$$00..2299

$$00..3300

$$00..3311

$$00..3322

$$00..3333

$$00..3344

$$00..3355

$$00..3366

$$00..3377

$$00..3388

$$00..3399D

ec 2

8,

2016

Jan 3

, 2017

Jan 9

, 2017

Jan 1

5,

2017

Jan 2

1,

2017

Jan 2

7,

2017

Feb 2

, 2017

Feb 8

, 2017

Feb 1

4,

2017

Feb 2

0,

2017

Feb 2

6,

2017

Mar

4,

2017

Mar

10,

2017

Mar

16,

2017

Mar

22,

2017

Mar

28,

2017


GOLD NEWSLETTER13

Osprey Gold Development Ltd.Recent Share Price: ................C$0.29Shares Outstanding: ........26.3 millionMarket Cap: ..................C$7.6 millionShares OutstandingFully Diluted:...................31.7 millionMarket CapFully Diluted: ...............C$9.2 million

Santacruz SilverMining

SCZ.V; SZSMF.OB604-569-1609

santacruzsilver.comSantacruz Silver Mining

cleaned up its balance sheetrecently via the sale of two non-core properties.

The first involved its El Gachiproperty in Sonora State. Thecompany is selling the property toFirst Majestic Silver (AG.NYSE;US$7.99), which owns the adja-cent Santa Elena mine. The trans-action closed for $2.5 million plusapplicable VAT.

Announced in late February,the transaction will provideSantacruz with the funds to paydown $750,000 of its loan toJMET and to make a $580,000payment to Minera HochschildMexico.

In a related transaction,Santacruz renegotiated the termsof its acquisition of both El Gachiand its San Felipe property. Theprior terms had Santacruz’sMexican subsidiary payingHochschild $19 million in stagedpayments for both properties.

Those terms were amended sothat the company could acquireSan Felipe for a payment of $2million payable on March 3, 2017and a payment of $8 millionpayable on or before Dec. 15,2017. In addition, Santacruzagreed to pay $500,000 by March31, 2017 for its interest in ElGachi. All three agreements

include applicable VAT.Shortly after this second trans-

action, Santacruz came to termswith Americas Silver to sign over100% of its interest in San Felipein exchange for $7 million plusVAT paid. From this transaction,Santacruz received $5.0 millionplus VAT and Hochschild receivedits $2 million payment plus VATfor San Felipe.

Santacruz then used $4.25 mil-lion of its San Felipe payment topay down the principal balance onits JMET loan to around $750,000.The company will soon pay off theresidual JMET balance with theproceeds from the El Gachi sale toFirst Majestic.

Finally, as part of its renegoti-ated deal, Santacruz has issued13,415,000 shares to Hochschild.

That’s a lot of maneuvering,but the upshot is that Santacruzemerges from these transactionswith an improved balance sheetand an ability to focus on its coreproducing projects: Rosario andVeta Grande.

The company just released2016 production numbers for thesetwo operations. Together, theygenerated 970,332ounces of silverequivalent material,with the lion’s shareof that total comingfrom Rosario.

Managementspent the fourth quar-ter engaged in pro-duction and opti-mization activities onboth projects. Andwhile this work had anegative impact onproduction during thequarter, the companyis confident the workwill result inimproved operational

performance for both mines in2017.

The company’s shares contin-ue to trade in a range that lookslike a bargain to my eyes, giventhe optimism I have in the compa-ny’s plans for its active mines andin the precious metals markets ingeneral.

This is a primary silver pro-ducer that can be bought on thecheap. If you want to buy intoleverage on rising precious metalsprices, this is a great vehicle forthat strategy.Santacruz Silver Mining Ltd.Recent Share Price: ................C$0.26Shares Outstanding: ......154.5 millionMarket Cap: ................C$40.2 millionShares OutstandingFully Diluted:.................182.4 millionMarket CapFully Diluted:............C$ 47.2 million

Taseko MinesTGB.NYSE-A; TKO.TO

877-441-4533tasekomines.com

Riding the theme of a strongerglobal economy and a slug of

APRIL 2017

(Continued...)

TTaasseekkoo MMiinneess

$$00..8800

$$00..9900

$$11..0000

$$11..1100

$$11..2200

$$11..3300

$$11..4400

$$11..5500

$$11..6600

Dec

28,

2016

Jan 3

, 2017

Jan 9

, 2017

Jan 1

5,

2017

Jan 2

1,

2017

Jan 2

7,

2017

Feb 2

, 2017

Feb 8

, 2017

Feb 1

4,

2017

Feb 2

0,

2017

Feb 2

6,

2017

Mar

4,

2017

Mar

10,

2017

Mar

16,

2017

Mar

22,

2017

Mar

28,

2017



infrastructure spending, copperprices have surged since theTrump election. And copper com-panies like Taseko Mines havecome along for the ride —Taseko’s share price has more thantripled since October.

The company helped its owncause recently with a solid set ofyear-end financials and a stream-ing arrangement on its portion ofthe silver production at Gibraltar,Taseko’s flagship copper mine inBritish Columbia.

The 2016 numbers were led byC$94.6 million in revenues, aC$33.2 increase over the C$61.4million Taseko generated in in2015. Earnings from mining oper-ations were C$37.4 million, a sub-stantial improvement over theC$10.7 million loss it posted in theyear prior. Net income for wasC$5.1 million compared to aC$23.4 million loss in 2015.

The news was even better inQ4, which benefited from thesurge in copper prices. Q4 2016earnings from mining operationsbefore depletion and amortizationwere C$46.6 million. That trans-lated into EBITDA of C$44.5 mil-lion and cash flow from operations

of C$49.7 million.Taseko finished theyear with a cash bal-ance of C$89.0 mil-lion.

In addition tohigher prices,Gibraltar also bene-fited from strongercopper production inQ4 and the restartingof its moly circuit inSeptember of lastyear. The mine pro-duced 40.7 millionpounds of copper and800,000 pounds ofmoly during thismost recent quarter.

Management bolstered its cashposition over this past month byclosing on a US$33 million pay-ment in exchange for 100% ofTaseko’s share of the silverpayable at Gibraltar.

That percentage will hold untilTaseko has delivered 5.9 millionsilver ounces to buyer OsiskoGold Royalties (OR.NYSE;US$11.25). After that thresholdhas been reached, Osisko willretain rights to 35% of all futureproduction at a price of $2.75 perounce. Osisko has also receivedthree million Taseko warrants witha strike price of C$2.74 per shareand an expiry date of April 1,2020.

The cash influx gives the com-pany approximately C$130 mil-lion in cash on hand. Managementwill use the ensuing months todetermine how best to employthose funds. Addressing debtobligations and moving Gibraltarand its other projects forward arethe most likely uses for the money.

Copper’s change in fortuneshas clearly benefited producerslike Taseko. However, with thecloud of uncertainty that has

formed around the Trump agenda,it’s not entirely clear where the redmetal is headed. We’ll keepTaseko a hold for now while wewait to see how prices respondover the next few weeks.Taseko Mines Ltd.Recent Share Price:...............US$1.35Shares Outstanding: ......221.9 millionMarket Cap: ...........US$299.6 million

Treasury MetalsTML.TO; TSRMF.OB

855-664-4656treasurymetals.com

The steady work TreasuryMetals has done on Goliath sinceits 2012 preliminary economicassessment on the project allowedit to release an impressive upgradeto the project’s economics recent-ly.

Using a base case gold price ofUS$1,225, the project has a post-tax NPV, discounted at 5%, ofC$306.1 million and a post-taxIRR of 25.0%. Payback from pro-duction for this scenario is esti-mated to be 4.1 years.

Initial capex for mine con-struction at Goliath is a relativelymodest C$133.2 million, with sus-taining capital costs of C$132.5million. The new PEA includes a37% increase in life-of-mine goldproduction and annualized produc-tion, over a 13-year period, of87,850 ounces. Gold production isforecast to exceed 100,000 inyears three through six.

Goliath would begin life as anopen-pit mine, with the cash flowfrom that portion of the minefunding the development andexploitation of the project’s under-ground resource. Projected cashcosts and all-in sustaining costsare both low, at US$518 andUS$566 per gold-equivalentounce, respectively.

GOLD NEWSLETTER15April 2017

Treasury Metals will spend2017 conducting a couple of phas-es of drilling at Goliath. Phase 1will include 5,000 meters of con-demnation drilling, along withstep-out exploration of targetslocated northeast of the mainresource zone. Phase 2 will consistof 30,000 meters of undergroundinfill drilling.

The company will incorporatethe results from this work into anupdated resource estimate for theproject. That data will then bewrapped into the feasibility studythat management plans to begin onGoliath in August 2017. The goalis to reach a production decisionon the project by mid-2018.

Treasury Metal’s shares havetraded up along with the broadermarket since December, butremain priced at an attractive buy-ing level, given the progress atGoliath and the brightening pic-ture for gold prices. It’s a buy atcurrent levels.Treasury Metals Inc.Recent Share Price: .................C$0.84Shares Outstanding: ........94.1 millionMarket Cap: ...................C$79 millionShares OutstandingFully Diluted:.................109.6 millionMarket CapFully Diluted:..............C$92.1 million New Recommendations

Aurvista GoldAVA.V; ARVSF.OB

416-682-2674aurvistagold.com

At the recent PDAC confer-ence in Toronto, I had the opportu-nity to meet with representativesof Aurvista Gold to get the compa-ny’s story.

It was compelling enough,both as a long-term hold and inlight of a near-term buying oppor-tunity, that I’ve decided to now

add it as a new recommendation. The company’s primary asset

is Douay, a multi-million-ouncegold project in the Abitibi regionof northern Quebec.

The 145-square-kilometer pro-ject has a long history. Previousowner Aurizon built the infrastruc-ture in the late 1990s to mine it asan underground gold operation,but low gold prices forced thecompany to walk away from theproject.

Aurvista took possession ofDouay in 2011. The project hasnow been re-conceived as a lower-grade, open-pit operation, one that— according to a global resourceestimate released in late February— hosts inferred gold resources of4.4 million ounces (130.0 milliontonnes grading 1.06 g/t gold at a0.5 g/t cut-off).

That’s more than double theinferred global resource (2.09 mil-lion ounces) released in 2012.

Earlier this month, Quebec’sregulators required the company tore-release the estimate showingonly Douay’s pit-constrainedresource. At 2.8 million ounces(83.3 million tonnes grading 1.05g/t at a 0.5 g/t cut-off), even thatresource was sub-stantial. In fact,today’s pit-con-strained resource was35% better than theunconstrained 2012estimate.

The company’sshare price didn’ttake much of a hit onthe news of therestatement, whichmakes sense. Theregulators may havewanted a much morerestricted resourcethis time around, but

the apples-to-apple comparisonbetween the current resource andthe one defined in 2012 is whatreally shows how much thedeposit has grown.

A key point here is the high-grade underground resourceAurizon left behind, which has thepotential to shorten the paybackperiod for an open-pit operation atDouay. Combine that with thepresence of world-class infrastruc-ture (a highway runs through theproperty and rail service is near-by), and you have the makings ofwhat should be a very financeablegold mine.

The mineralization at Douay isopen in all directions, and theproperty contains several prospec-tive targets, so Aurvista is about toembark on a 30,000-meter drillingprogram that will deliver plenty ofresults to the market.

The company will use datafrom this effort to generate arevised resource estimate, proba-bly later this year, and then worktoward an economic study nextyear. So, lots of news flow.

And while the resource esti-(Continued...)


mate correction didn’t bring thestock back much, we have beenseeing some share-price weaknesssince March 20, when prior ownerVior dividended its shareholders alarge block of Aurvista shares itreceived in the Douay sale.

In other words, millions ofshares are coming onto the marketright now, creating an attractiveshort-term buying opportunity.

My advice: Use the weaknessfrom this event to build a positionin Aurvista and its advanced-stagegold project.Aurvista Gold Corp.Recent Share Price: ................C$0.31Shares Outstanding: ......135.0 millionMarket Cap: ................C$41.9 millionShares OutstandingFully Diluted:.................200.0 millionMarket CapFully Diluted:.................C$62 million New Recommendations

Tower ResourcesTWR.V; TWRFF.OB

604-558-2565towerresources.ca

I’d recommended TowerResources for a while a few years

back near the peak ofthe market, and wedropped it as thecompany essentiallywent into hiberna-tion.

But it’s nowback, and with somenew properties thathave attracted somevery smart money,reportedly includinglegendary explo-rationist DavidLowell.

The money iscoming in twostreams. The first is atransaction with

Sandstorm Gold (SAND.NYSE-A; SSL.TO; US$4.35), a royaltyand streaming company and alongtime recommendation of thisletter.

Sandstorm is paying TowerC$500,000 in exchange for 2% netsmelter returns on the company’sthree core projects: Rabbit North,Nechako Gold and More Creek. Itwill also subscribe for C$500,000worth of a planned C$2.7 millionfinancing (in which I will also be aparticipant).

Sandstorm’s portion of theequity raise will see the goldstreaming company take up 3.44million units of Tower priced atC$0.145 per unit. Each unit willconsist of one common share andone half-warrant, redeemable on awhole-warrant basis at C$0.22 pershare for the next five years. Therest of the financing will take placealong similar terms.

I took the chance to reviewTower’s property portfolio withmanagement recently, and foundthe three aforementioned proper-ties very exciting indeed.

Located in south-central British

Columbia, Rabbit North is a large,16,400-hectare copper-gold projectsituated near excellent infrastruc-ture. It also lies within 14 kilome-ters of New Gold’s New Aftonmine and 28 kilometers northeastof Teck’s Highland Valley mine.Porphyry-related alteration andmineralization has been tracedthrough drilling by both Tower andprevious operators over an exten-sive 4-km-by-4-km area at NorthRabbit.

As an example, Hole RN-008drilled by Tower last year hit 200meters of 0.30% copper and 0.15g/t gold, including 72 meters of0.47% copper and 0.20 g/t gold.Those might not sound like block-buster grades, but they’re consis-tent with the averages at operatingmines in the area.

Management plans to spend2017 conducting further diamonddrilling of the project’s WesternMagnetite and Chrysocolla targets,and conduct a geophysical surveyof the greater “Durand Stock” areaencompassing those targets. Inaddition, the company will followup on the prospective Beaton andDairy geophysical targets which, inaddition to the Durand Stock area,represent three potential large-scaleporphyry possibilities.

Moving north to pretty muchdead-center British Columbia, weencounter the company’s Nachakogold project. Located 80 kilome-ters south of Vanderhoof, Nachakolies within 30 kilometers of NewGold’s Blackwater gold project(8.2 million ounces of gold and60.8 million ounces of silver inproven and probable reserves).

The property has potential tohost both Blackwater-style epither-mal mineralization and porphyry-related copper-gold mineralization.For example, historic drilling byRio and Placer Dome hit 140

TToowweerr RReessoouurrcceess

$$00..113355

$$00..114400

$$00..114455

$$00..115500

$$00..115555

$$00..116600

$$00..116655

$$00..117700

$$00..117755

$$00..118800

$$00..118855D

ec 2

8,

2016

Jan 3

, 2017

Jan 9

, 2017

Jan 1

5,

2017

Jan 2

1,

2017

Jan 2

7,

2017

Feb 2

, 2017

Feb 8

, 2017

Feb 1

4,

2017

Feb 2

0,

2017

Feb 2

6,

2017

Mar

4,

2017

Mar

10,

2017

Mar

16,

2017

Mar

22,

2017

Mar

28,

2017


GOLD NEWSLETTER17

meters of 0.25% copper, including40 meters of 0.42% copper in shal-low drilling with poor recoveries.Gold assays from this intersectionare not known.

Importantly, Tower’s team isconducting state-of-the-art tillanalysis that can determine withamazing accuracy how far individ-ual gold grains have been trans-ported by glacial flows. The resultsof this analysis are pointing direct-ly toward a gold target that will befurther defined by geophysics priorto drilling.

Finally, the More Creek prop-erty lies smack in the middle theGolden Triangle of BritishColumbia’s northwestern corner.The 6,430-hectare project lies just55 kilometers north of PretiumResources’ Brucejack project (9.1million ounces of gold in the mea-sured and indicated categories).

Infrastructure in the region isabundant, and Tower’s geologistshave high hopes for More Creek asa potential home to an epithermalgold-silver deposit. The reason?Somewhat similar to the situationat Nachako, Tower has conductedstream sediment sampling that hasreturned cinnabar (associated withepithermal systems) and goldgrains pointing toward a confinedcatchment basin upslope. In short,the gold has to come from this lim-ited area.

The company will spend 2017conducting detailed mapping of theproject, along with more streamsampling and geophysical work.The goal will be to define more-precise targets for drilling.

As you can see, there’s lots totalk about with Tower Resources.With the money coming in fromthe financing, it will be able to hitthese projects hard during the bal-ance of the year. As a result, news

flow should be plentiful.Given the quality and potential

upside of its three core projects andthe smart money that’s lining upbehind this financing, TowerResources is a first-rate explorationplay at current levels…and a buy.Tower Resources Ltd.Recent Share Price: .................C$0.15Shares Outstanding: ........65.5 millionMarket Cap: ..................C$9.8 millionShares OutstandingFully Diluted: ..................85.5 millionMarket CapFully Diluted:..............C$12.8 million

Brief Notes...

• Avrupa Minerals (AVU.V;AVPMF.OB; C$0.09) announcedthat its joint venture partner ColtResources (GTP.V; C$0.04) hasdefaulted on its earn-in agreementon their shared Alvalade copper-zinc project in southern Portugal.

Avrupa has been working withColt for some time to resolve theissues, but its partner appears to beunable to continue contributing tothe project. The prospect generatoris running the traps to ensure itdoesn’t lose its interest in Alvalade.

While obviouslynot good news, thisdust-up is a reminderthat Avrupa has adiversified portfolioof projects inPortugal, Kosovo andGermany. I’m confi-dent in management’sability to find a newpartner, perhaps witha better deal, forAlvalade. We’ll keepit a hold for now.• Calibre Mining(CXB.V;CXBMF.OB;C$0.24) is movingforward with joint

venture partner Centerra Gold(CG.TO; C$7.57) on exploration oftheir shared Suina gold-copper pro-ject in northeast Nicaragua.

Centerra can earn a 70% inter-est in the project by spendingC$9.0 million on exploration byDec. 31, 2020. The partners plan aUS$1.35 million program forSuina in 2017. The companies willply the 241-square-kilometerNorthern Suina project with soiland rock sampling, with diamonddrilling planned for the back halfof the year.

Suina is part of suite of projectsCalibre controls in Nicaragua.With Centerra’s help on Suina anda maiden drilling program under-way on its Primavera gold-copperproject, Calibre should continue tocrank out the news flow in 2017. Aleveraged bet on exploration suc-cess and the resurgence of goldprices, Calibre remains near itshighs for the year and is a hold fornow.• East Africa Metals (EAM.V;EFRMF.OB; C$0.27) closed on itsC$5.2 million private placement

APRIL 2017

(Continued...)


with Chinese company ShandongTyan Home (“STH”) earlier thismonth.

Per the initial announcement ofthe deal last year, STH has alsoagreed to provide up to US$10 mil-lion in a line of credit to EastAfrica. That money would gotowards the development of thecompany’s Terakimti gold depositin Ethiopia.

East Africa also recentlyannounced results from an ongoingdrilling program on the on theHarvest project that hostsTerakimti. Drilling on theMayshehagne VMS deposit yield-ed a highlight intersection grading4.32% copper, 1.04 g/t gold, 35.9g/t silver and 6.98% zinc over 21.2meters.

With the money in hand fromSTH, the company can stayaggressive on the exploration front.Look for more news flow fromdrilling on its Ethiopia projects inthe months ahead. I like these pro-jects, and I like this company atcurrent levels. It’s still a buy.• Exeter Resources (XRA.NYSE-A; XRC.TO; US$1.76) made a bigsplash this week with the

announcement thatGoldcorp(GG.NYSE; G.TO;US$14.92) hadagreed to acquire thecompany in all sharedeal.

The transactionvalues Exeter atC2.58 per share.Shareholders willreceive 0.12 shares ofGoldcorp for everyshare of Exeter held.The total acquisitionprice is aroundC$247 million.

The deal forExeter is part of a larger transac-tion between Goldcorp, Kinrossand Barrick in which Goldcorp andBarrick will end up 50/50 partnersin Barrick’s Cerro Casale project,also in the Maricunga district ofChile, just 10 kilometers south ofExeter’s Caspiche project.Eventually, Barrick will also be a50% partner in Caspiche, with thenew partners figuring that a coordi-nated development of the two pro-jects will lower capital expensesand therefore greatly enhance eco-nomics.

For those of youwho bought Exeteron my initial recom-mendation back in2015, the impliedtransaction price rep-resents a near-five-fold gain, and a 56%gain from my mostrecent recommenda-tion in our Marchissue. GivenGoldcorp’s liquidity,it shouldn’t be hardto monetize that posi-tion if you choose.

With the takeout,we bid adieu to

Exeter and Caspiche, one of thelargest copper-gold deposits in theAmericas. If you share my opti-mism in the gold market, you’llwant to redeploy your capital intoone of the many leveraged goldand/or precious metals plays in ourportfolio.• GMV Minerals (GMV.V;GMVMF.OB; C$0.36) announcedfinal results this week from its win-ter drilling program at MexicanHat. The 15 holes in this latestbatch of assays were step-out holesto the southeast and northeast fromthe known mineralization on theproperty.

Four of seven holes drilled onthe H2 Zone hit significant inter-sections of gold, and extended thestrike length of this zone by asmuch as 400 meters. The companyreports that the H2 Zone nowextends for 1,300 meters alongstrike, and remains open to thenorthwest and southeast, as well asto depth. The highlight intersectioncame from Hole 11 (73.2 meters of0.60 g/t gold, including 33.5meters of 0.92 g/t gold).

Five of the eight holes drilledon the various other zones in the

GGoollddQQuueesstt MMiinniinngg

$$00..2266

$$00..2288

$$00..3300

$$00..3322

$$00..3344

$$00..3366

$$00..3388

$$00..4400

$$00..4422

$$00..4444

$$00..4466

$$00..4488

$$00..5500

$$00..5522

$$00..5544

$$00..5566

Dec

28,

2016

Jan 3

, 2017

Jan 9

, 2017

Jan 1

5,

2017

Jan 2

1,

2017

Jan 2

7,

2017

Feb 2

, 2017

Feb 8

, 2017

Feb 1

4,

2017

Feb 2

0,

2017

Feb 2

6,

2017

Mar

4,

2017

Mar

10,

2017

Mar

16,

2017

Mar

22,

2017

Mar

28,

2017



program encountered economicmineralization. The best hole wasHole 8 (24.4 meters of 0.69 g/tgold, including 21.3 meters of 0.74g/t gold).

The results are highly promis-ing, and confirm the model of anextensive, low-grade, low-costopen pit project with high goldrecoveries. Management is plan-ning additional drilling to followup on these extensions of the min-eralization on the property.

In short, the potential atMexican Hat is still very muchwide open. It remains a solid playon gold exploration in a safe dis-trict and a buy.• GoldQuest Mining (GQC.V;GDQMF.OB; C$0.53) has closedon a non-brokered private place-ment with Agnico Eagle Mines(AEM.NYSE; US$43.17), whereinthe mid-major will injectC$22,860,000 million in cash intothe company.

The deal resulted from theplacement of 38.1 million shares ofGoldQuest with Agnico.GoldQuest will use the money tofund aggressive exploration of itsmyriad targets in the DominicanRepublic’s Tireo Gold Belt. It willalso advance development on itsflagship Romero project in thecountry.

The investment is a strongendorsement of GoldQuest’sprospects and an indication that thesmart money is lining up behindthis company and its property port-folio. Like most gold stocks,GoldQuest is up strongly over thepast few months. Still, it’s a goodvalue at current levels and remainsa buy, especially on any significantweakness.• Shareholders of JDL Gold(JDL.V; LWLLF.OB; C$1.58) andLuna Gold have approved the

companies’ merger to form TrekMining. The deal will close onMarch 31. Luna Gold shareholderswill receive 1.105 shares of JDLfor each share of Luna held.

The companies have closed ontwo tranches of a non-brokered pri-vate placement that raisedC$83,419,172 via the issuance of41,709,586 subscription receipts. Asubscription receipt entitles theholder to one common JDL shareand one purchase warrant with aC$3.00 strike price. The warrant isgood through Oct. 6, 2021.

The money will go towardsTrek’s plan to revitalize theAurizona gold project. As I statedin last month’s review and recom-mendation, I like this deal, espe-cially in the current gold environ-ment. The new company is a buy.• Marlin Gold (MLN.V;MLNGF.OB; C$0.70) announcedencouraging drill results from thenorth side of the pit wall at LaTrinidad, the company’s flagshipgold project in Sinaloa, Mexico.

Based on these results, manage-ment believes that the HS Zonemineralization at La Trinidadextends for at least 30 metersbeyond the pit wall.A decision onwhether to extendthe pit footprint tocapture this addi-tional mineralizationwill be made pend-ing further assaysfrom the area.

Highlights fromthe current batch ofassays include Hole26 (6.5 meters of2.59 g/t gold), Hole27 (9.40 meters of3.27 g/t gold), andHole 28 (10.2meters of 2.68 g/tgold).

With gold prices on the rise,Marlin is primed to enjoy solidcash flows over the near term frommining the high-grade portion ofthe HS Zone at La Trinidad. It’sstill a buy.• Midas Gold (MAX.TO;MDRPF.OB; C$0.79) announcedan eye-popping assay from recentresource definition drilling onStibnite, the company’s multi-mil-lion-ounce gold project in Idaho.

Hole 421 intersected 217meters of 3.2 g/t gold, 6.1 g/t silverand 0.3% antimony, including 21meters of 5.79 g/t gold, 26.7 g/t sil-ver and 1.3% antimony. That’s astellar intersection, and a strongindication of the quality of depositMidas controls at Stibnite.

The same argument thatprompted me to add Midas Gold toour list in 2013 continues to hold:Any company with a multi-mil-lion-ounce, open-pittable gold pro-ject in a safe jurisdiction is goingattract takeout attention frommajors.

And while Midas waits for thebidding to commence, it is steadily

(Continued...)

MMaarrlliinn GGoolldd

$$00..5522

$$00..5544

$$00..5566

$$00..5588

$$00..6600

$$00..6622

$$00..6644

$$00..6666

$$00..6688

$$00..7700

$$00..7722

Dec

28,

2016

Jan 3

, 2017

Jan 9

, 2017

Jan 1

5,

2017

Jan 2

1,

2017

Jan 2

7,

2017

Feb 2

, 2017

Feb 8

, 2017

Feb 1

4,

2017

Feb 2

0,

2017

Feb 2

6,

2017

Mar

4,

2017

Mar

10,

2017

Mar

16,

2017

Mar

22,

2017

Mar

28,

2017



de-risking the project and provid-ing market with a diet of assays ledby this month’s extremely impres-sive hole. Midas is a great bet onhigher gold prices at current levels.• Millrock Resources (MRO.V;MLRKF.OB; C$0.50) has cut adeal with Kinross to explore thejunior’s Liberty Bell project inAlaska.

Kinross can earn a 70% interestin Liberty Bell by spending US$5million on exploration over fiveyears and paying up toUS$145,000 in management feesto Millrock. The deal also includesup to US$145,000 in advance min-imum royalty payments over fiveyears.

The deal is a reminder thatMillrock is an exemplar of theprospect generator model of juniormining exploration. The companyhas built an impressive portfolio ofassets and found a variety of jointventure partners to fund moreadvanced work on them.

Millrock is a leveraged way toplay increases in precious and basemetal prices and continues to beattractive for accumulation at cur-rent levels.

• Northern DynastyMinerals(NAK.NYSE-A;NDM.TO; US$1.43)announced it is inactive discussionswith the new regimeat the EPA to resolvethe issues holding updevelopment atPebble, the company’smassive copper-gold-moly project inAlaska.

The positive turnin developments arewhat I anticipatedwith the Trumpadministration now

installed in the White House.However, despite the more-accom-modating political environment,the company’s stock has taken adramatic hit from the short-and-distort campaign launched a fewweeks back.

The good news is that, with thestock trading at less than half itspeak, it looks like an excellent bar-gain once again.

The main arguments for own-ing this stock are still very much inplay. I’m confidentthat management willresolve the EPA dis-pute on Pebble with amore amenableadministration andfind a way to put theproject back on thedevelopment track,which means thatcurrent trading levelsare a buying opportu-nity.• Soil sampling onPrecipitate Gold’s(PRG.V; PREIF.OB;C$0.12) Juan deHerrera project in theDominican Republic

has outlined a new gold-in-soilanomaly on the Ginger Ridgezone.

The new area is 850 meters instrike and an average of 100 metersin width, and is also coincidentwith recently defined geophysicalanomalies in the area. Soil sam-pling continues, as the companylooks to add identify a new batchof targets for its next round ofdrilling at Juan de Herrera.

Although Precipitate’s shareprice hasn’t done much lately, Istill like this company for the longterm. It’s well-managed and theupside at Juan de Herrera is signifi-cant. Throw in the added interest inthe area drawn by neighboringGoldQuest, and you have the mak-ings of an inexpensive (and poten-tially lucrative) bet on gold explo-ration. It’s a buy.• Sabina Gold & Silver(SBB.TO; SGSVF.OB; C$1.58)closed recently on a bought-deal,flow through financing that raised$6,072,500 in gross proceeds forthe company.

The offer consisted of3,150,000 shares priced at C$1.75

NNoorrtthheerrnn DDyynnaassttyy MMiinneerraallss

$$11..0000

$$11..2255

$$11..5500

$$11..7755

$$22..0000

$$22..2255

$$22..5500

$$22..7755

$$33..0000

$$33..2255

$$33..5500D

ec 2

8,

2016

Jan 3

, 2017

Jan 9

, 2017

Jan 1

5,

2017

Jan 2

1,

2017

Jan 2

7,

2017

Feb 2

, 2017

Feb 8

, 2017

Feb 1

4,

2017

Feb 2

0,

2017

Feb 2

6,

2017

Mar

4,

2017

Mar

10,

2017

Mar

16,

2017

Mar

22,

2017

Mar

28,

2017


SSaabbiinnaa GGoolldd && SSiillvveerr

$$00..9900

$$00..9955

$$11..0000

$$11..0055

$$11..1100

$$11..1155

$$11..2200

$$11..2255

$$11..3300

$$11..3355

$$11..4400

$$11..4455

$$11..5500

$$11..5555

$$11..6600

Dec

28,

2016

Jan 3

, 2017

Jan 9

, 2017

Jan 1

5,

2017

Jan 2

1,

2017

Jan 2

7,

2017

Feb 2

, 2017

Feb 8

, 2017

Feb 1

4,

2017

Feb 2

0,

2017

Feb 2

6,

2017

Mar

4,

2017

Mar

10,

2017

Mar

16,

2017

Mar

22,

2017

Mar

28,

2017



per share. The equity raise padsSabina’s coffers in anticipation of afavorable regulatory decision ondevelopment and exploration of itsBack River gold project inNunavut. Management expects arecommendation on the environ-mental block on the project in Julyof this year.

The cash infusion is a sign ofthe market’s optimism that a reso-lution will be found and Sabinawill be able to move forward atBack River. As you know, I’vebeen of this mind since the contro-versy first developed.

While I expect a positive out-come, news flow will be fairlyslow in the interim, so we’ll keepthe company a hold.• Stratton Resources (SI.V;C$0.78) finally announced theappointment of its new CEO —and I’m glad to say the appointeeis Michael Kosowan, a long-timefriend of mine in the industry and avery highly respected professional.

The company’s announcedproperty portfolio is keyed by avery large position inNewfoundland, but I think it’s fairto say that the company will alsoextend its focus to high-qualityexploration/development projectsin any safe jurisdiction. And with arecently closed C$13.2 millionfinancing (in which I participated),they’ll be able to pursue a widevariety of ventures.

As part of the announcement ofMichael Kosowan as president andCEO, the company also announcedthat Shawn Wallace and IvanBebek will become co-chairmen ofthe board of directors.

Importantly, the company alsoannounced it was changing itsname to Torq Resources, with achange of symbol to TORQ on theTSX Venture exchange (the

exchange recently allowed four-let-ter symbols for the first time).

The company remains a buybased largely on the track record ofits management team, and is evenmore so now that the share pricehas come off of its recent highs.• SolidusGold’s (SDC.V;SLDGF.OB; C$0.13) deal to buythe Northumberland project hasfallen through. It’s a disappoint-ment, given my confidence that thecompany’s management teamcould have worked wonders withthe project’s story.

That said, we should cut ourlosses on Solidus. I’ll discontinuecoverage in this letter for now,although I am personally holdingonto my position for the time beingin hopes that this top-quality man-agement team can turn aroundquickly with a new project.• Trilogy Metals (TMQ.NYSE-A;TMQ.TO; US$0.53 ) reported onpermitting progress on the AmblerMining District Industrial AccessProject.

The project, which involvesbuilding a critical access road con-necting the Ambler district withFairbanks, is slowlymoving through theprocess. The latestmilestone is a Noticeof Intent from theBureau of LandManagement to beginpreparing an environ-mental impact studyon the project.

Though slow, theprocess is well worthkeeping an eye on, asit has the ability tounleash the district-scale potential ofTrilogy’s two projectsin the Ambler district.With that thought in

mind, the company has committeda $7.1 million budget to mainlypursue a prefeasibility study on itshigh-grade polymetallic Arctic pro-ject.

The company continues to be along-term play on base and pre-cious metals development inAlaska’s interior. It remains a holdfor now.• TriMetals Mining (TMI.TO;TMIAF.OB; C$0.27) released thefinal batch of assays from its 2016drilling program on its flagshipGold Springs project.

The batch was highlighted byHole 8 (1.1 g/t gold and 15.61 g/tsilver over 30.5 meters), whichcame from the South Jumbo target.Hole 1, drilled in the central por-tion of Jumbo, cut 0.79 g/t goldand 5.79 g/t silver over 12.2meters.

The results of last year’s pro-gram will be incorporated into anupdated resource estimate on GoldSprings. That study should be outsoon, and it has the potential to sur-prise to the upside. TriMetals is abuy.

UUrraanniiuumm EEnneerrggyy

$$11..0000

$$11..1100

$$11..2200

$$11..3300

$$11..4400

$$11..5500

$$11..6600

$$11..7700

$$11..8800

$$11..9900

Dec

28,

2016

Jan 3

, 2017

Jan 9

, 2017

Jan 1

5,

2017

Jan 2

1,

2017

Jan 2

7,

2017

Feb 2

, 2017

Feb 8

, 2017

Feb 1

4,

2017

Feb 2

0,

2017

Feb 2

6,

2017

Mar

4,

2017

Mar

10,

2017

Mar

16,

2017

Mar

22,

2017

Mar

28,

2017


(Continued...)


• Uranium Energy (UEC.NYSE-A; US$1.39) is another would-beproducer that can quickly jumpback into operation if and whenuranium prices cooperate.

Its suite of projects, highlighted

by the hub-and-spoke model ofdevelopment it is following inSouth Texas, gives it the ability toflip the switch much more quicklyon production than companies withearlier-stage projects.

A long-term bet on uranium,this company has the potential togenerate big profits in a uraniumbull market. Uranium Energy isattractively priced for long-termaccumulation at current levels.

PotpourriMiscellaneous notes and observations

By Brien Lundin

The changing of theseasons…You might not know it by the

behavior of the gold price recent-ly, but we’re in the midst of whatis traditionally a strong season forgold.

It’s not always the case, butspring and early fall are typicallytimes when physical demand forgold ramps up, putting upwardpressure on the price. To whatev-er extent this seasonality had beenreliable, however, that reliabilityhas been reduced somewhat bythe ever-growing influence of thegold futures markets.

These paper gold markets, ofcourse, have little to no connec-tion with actual physical demand.

The “sell in May, then goaway” adage made famous in thestock market also applies to met-als and mining stocks, inasmuchas it’s based on the tendency ofprofessional traders and moneymanagers to go on vacation orday dream of doing so during thesummer months.

It may thusly stand as themost reliable of the seasonal fac-tors affecting gold.

For my part, the uncommonlymild winter we experienced downsouth here has led me to boldlyattack my “garden” much earlierthan usual.

I put the term in scare quotesbecause my garden is quite largeand situated at my country prop-erty in southern Mississippi.Because I only make it up there totend to it every two or threeweeks at best during the latespring and summer, the gardenquickly becomes a mish-mash ofvegetables and chest-high weeds.

Not only that, but because itlies way out in relative wilder-ness, the garden is under constantassault from every manner ofworm, fungus, bug, bird androdent. I estimate I grew 200tomatoes last year to get 20 har-vested intact (and most of thosecame only because I picked themwhile still green).

So I attacked the garden withsome trepidation last weekend.And believe me, following a falland winter of complete disregard,it was quite a mess. After hours ofhoeing and pulling weeds, I man-aged to clear enough beds to putin some tomato and pepperplants, and seed some squash and

zucchini…but it’s still generallyan embarrassing mess.

I teetered on the verge ofbreaking out the Roundup for theweeds, thereby destroying mywhole semi-organic approach.Thankfully I ran out of time,putting that decision off foranother day.

Like gold, I have some hopefor my garden growing towardthe sky over the next few months.But unlike gold, I can at least dosomething to help my gardenalong.

For gold, all we can do ishope for the best – and rememberto take our harvest, sometimesbefore it fully ripens...and beforethe pests can take their toll.

Pair trading in themetals -- or, how not to bet againstyourselfI’m not an active trader -- I’m

more of the buy and hold…andhold…and hold type of investor.

So I’m treading on thin icewhen I take to task a trader asrenowned as my friend Dennis


Gartman. But everyone else in thegold bug community seems totake shots at him, so I guess Imight as well join the club.

Of course, Dennis is alsofamed for disparaging gold bugs.But he’s also noted in his epony-mous newsletter that he’s boughtgold and silver bullion as insur-ance against the day that every-thing goes to hell in a hand bas-ket, so he’s something of a closet-ed gold bug himself.

Anyone who’s in the media asmuch as Dennis has to have somesort of a shtick to rely on, andDennis’ supposed intellectualfeud with the gold bug communi-ty is, I believe, just that. So itdoesn’t bother me, and if I didn’tfeel he had much to offer in hisoutlook on all the markets Iwouldn’t keep inviting him to myannual New Orleans InvestmentConference.

But where I take issue withDennis is his zpublished bet onthe gold:silver ratio (GSR), whichas he notes only just now tradedinto the green after almost a yearof being put on.

The profitability of the tradeis irrelevant to me. In fact, afalling gold:silver ratio (or silveroutperforming gold) is a hallmarkof a strong gold market, so bygoing long silver and shortinggold the trade should be prof-itable in a bull market environ-ment.

But by making this tradeyou’re accepting the fundamentalthesis of a rising gold price, butthen choosing to slash yourpotential gains by actually short-ing gold -- and still accepting allthe risk that your thesis is wrong.

A typical “pair trade” is sup-posed to be market neutral bypairing long and short positions

in two correlated assets (typicallystocks in the same sector, likeCoca Cola and Pepsi) that nor-mally trade in line with eachother. Thus, when these assetsdiverge, you’re shorting one andgoing long the other in a bet thatthe correlation will return, regard-less of what the sector does.

In the case of a bet on afalling GSR, however, you’re bet-ting that the assets will continueto separate while they both rise.Thus, you’re shorting an assetthat you’re assuming will rise…and therefore betting againstyourself.

Now, Dennis took a lot ofheat years ago when he beganbuying gold denominated in yenand euros. To effect this trade, hewould go long gold in dollars, butshort the other currencies.

The thesis here was that goldwould rise as the supply of eurosand yen were dramaticallyincreased, and that these curren-cies would in the process bedevalued at a greater pace thanthe dollar.

I think this is a sound strate-gy. All the world’s currencies arein a race to the bottom of the hill,but it only makes sense that nowand then some will be runningfaster than others.

And in fact, during much ofthe time that Dennis has had thesegold/euro and gold/yen trades on,they’ve outperformed gold tradedin dollars.

But shorting gold and buying

silver when you think both aregoing to rise simply doesn’t makesense.

I’m sure Dennis will dispar-age this as gold bug nonsense…but by this point we expect him toshtick it to us.

Exciting news on theway for NOICI was hoping to have two

exciting new speakers toannounce for this year’s NewOrleans Investment Conference,being held from October 25-28,but we weren’t able to confirmthem as of press date.

That said, I’m really excitedabout these additions. This isgoing to be one of our best yearsever, both in terms of the scintil-lating insights and forecasts beingmade from out stage…as well asa market environment that I thinkwill spin out huge winners in themetals sector.

So I’m writing now to saystay tuned for more news -- butact now. And I mean right now.

You see, attendance has beenbuilding over the last two years,to the point where our convenienthost hotel, the New OrleansHilton, completely sold out lastyear. Quite literally, there werehotel desks that had to be bussedback and forth to outlying hotelsin the suburbs.

You don’t want to miss thisyear’s New Orleans Conference,

“All the world’s currencies are in a race to thebottom of the hill, but it only makes sense thatnow and then some will be running faster thanothers.

(Continued...)


because the intellectual stimula-tion and potential profits will belike nothing we’ve seen in years,and like nothing you’ll find any-where else.

But you also don’t want tosign up at the last minute andfind yourself inconvenienced…or even unable to attend…because of a sell-out.

Get your registration in now,

lock in a savings of up to $400,get a free Gold Club upgrade (a$189 value) and guarantee yourroom in our host hotel. Just callus toll free at 800-648-8411 orCLICK HERE to registeronline.

©2017 Jefferson Financial, Inc. All rights reserved. Published by Jefferson Financial, Inc., 111 Veterans Memorial Boulevard, Suite 1555, Metairie,LA70005. Subscription Price: $198 per year. Single issues available for $20 each. New subscribers may cancel their order anytime and receive a fullrefund on all unfulfilled issues. Make checks payable to Jefferson Financial. Gold Newsletter was founded by James U. Blanchard III. Editor: BrienLundin; Art Director: Kevin Pilet.For subscription details, please call 800-648-8411, or send E-Mail to [email protected]. The publisher and its affiliates, officers, directorsand owner actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase ordecrease such positions without notice. The publisher is not a registered investment advisor. Subscribers should not view this publication as offering per-sonalized legal, tax, accounting or investment-related advice. The news and editorial viewpoints, and other information on the investments discussedherein are obtained from sources deemed reliable, but their accuracy is not guaranteed. Authors of articles or special reports are sometimes compensat-ed for their services.

NewsletterGold

In Our46th Year

Remember: Use your e-mailaddress and Password to log intothe “Subscribers Only” section of theGold Newsletter site(goldnewsletter.com).

This allows you access to thecurrent and archived issues of GoldNewsletter, the Gold Newsletterportfolio and special offers and prod-ucts. You'll also be able to view youraccount and profile, and make anynecessary modifications.

https://www.eventbrite.com/e/2017-new-orleans-investment-conference-tickets-27497132664?aff=GNL0417

http://www.goldnewsletter.com/

vol. xlvi april 2017 “stuck in the...

Documents